Correlation Between Soditech and Union Technologies
Can any of the company-specific risk be diversified away by investing in both Soditech and Union Technologies at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Soditech and Union Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Soditech SA and Union Technologies Informatique, you can compare the effects of market volatilities on Soditech and Union Technologies and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Soditech with a short position of Union Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soditech and Union Technologies.
Diversification Opportunities for Soditech and Union Technologies
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Soditech and Union is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Soditech SA and Union Technologies Informatiqu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Technologies and Soditech is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Soditech SA are associated (or correlated) with Union Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Technologies has no effect on the direction of Soditech i.e., Soditech and Union Technologies go up and down completely randomly.
Pair Corralation between Soditech and Union Technologies
Assuming the 90 days trading horizon Soditech SA is expected to generate 0.11 times more return on investment than Union Technologies. However, Soditech SA is 9.44 times less risky than Union Technologies. It trades about -0.21 of its potential returns per unit of risk. Union Technologies Informatique is currently generating about -0.05 per unit of risk. If you would invest 127.00 in Soditech SA on September 13, 2024 and sell it today you would lose (2.00) from holding Soditech SA or give up 1.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Soditech SA vs. Union Technologies Informatiqu
Performance |
| Timeline |
| Soditech SA |
| Union Technologies |
Soditech and Union Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Soditech and Union Technologies
The main advantage of trading using opposite Soditech and Union Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soditech position performs unexpectedly, Union Technologies can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Union Technologies will offset losses from the drop in Union Technologies' long position.The idea behind Soditech SA and Union Technologies Informatique pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Union Technologies vs. Linedata Services SA | Union Technologies vs. Lectra SA | Union Technologies vs. Manitou BF SA | Union Technologies vs. Ossiam Minimum Variance |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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